The Egyptian stock exchange has continued its horizontal short-term movement amid relative consolidation of the weekend trading with support from the near approval of the Investment Law and the increasing interest of foreign institutions and the increase in their purchases.
Analysts expected the market to move towards the level of 12,850 points during this week’s trading; however, the upward move needs liquidity of more than EGP 1bn, according to analysts.
The Egyptian stock exchange’s main index (EGX) has increased 1.47% during last week’s trading, to close at the level of 12709.9 points; and with a slower pace, EGX70 index increased by 0.86%, closing at 592 points. The EGX100 index has recorded an increase of 0.61%, closing at 1360.1 points.
Net purchases of Arab and foreign investors in the market have increased on Thursday by EGP 85.12m and EGP 5.11m respectively, while Egyptian investors closed their selling deals at a net of EGP 90.23m.
The market was negatively impacted last week with the increased international calls to control inflation through increasing interest rates.
Shawkat El Maraghi, the managing director of brokerage at HC Securities and Investment Bank, said that increasing interest rates to face inflation at this point is unsuitable for direct or indirect investment.
He added that the current levels of interest rates in the market are considered high, and increasing the risk-free return will pressure the feasibility of investing in the EGX. The increase of bank yields will increase the cost of margin purchases.
“The market needs to increase the resistance level of 12,700 pints in the short term and move towards 12,850 points; however, the whole picture of the market for the medium term has not changed,” said Hisham Hassan, technical analysis manager in Acumen Securities Brokerage.
He added that the market needs to stay beyond the level of 11,800 points to avoid moving towards new lows. There is a change to reach a new historical peak of more than 13,500 points, according to technical indicators.
He noted that the market was positively affected by the decision to approve the Investment Law, which is considered an incentive for foreign traders to intensify their purchases in the stock exchange as they are considered the main engine of the market.